On Monday, CloudMD Software & Services (TSXV: DOC) reported its second-quarter financials. CloudMD’s revenue was $2.8 million, a 163% increase year over year, and an 8.7% decrease quarter over quarter. Their adjusted EBITDA was -$2 million, and gross margins came in at 42%.
On the back of the quarter, Canaccord analyst Doug Taylor increased his 12-month price target to C$1.75 from C$1.30 and reiterated his speculative buy rating. Two other analysts also have buy ratings on the stock. The highest price target comes from Beacon Securities with a C$2 price target or a 34% upside, while the lowest comes from Echelon Wealth Partners with a $1.70 or a 14% upside. The current mean price target is C$1.82.
In Canaccord’s note to investors, Dough Taylor comments, “Q2 miss on early COVID lockdowns; Awaiting M&A to accelerate a path to breakeven EBITDA.” Taylor says that he is looking past this quarter as the company has announced five acquisitions since quarter-end, which are highly accretive and will contribute to CloudMD’s financials starting in the third quarter. These five acquisitions are expected to contribute roughly $11 million in revenue yearly. Taylor says, “we expect the company will approach breakeven EBITDA as it continues to aggressively consolidate and drive organic growth through innovations including its pharmacy telemedicine kiosks.”
ClouldMD’s revenue came in below both the street’s average of $3.1 million and Canaccord’s high estimate of $3.5 million, along with EBITDA, where the street was forecasting it to come in -$0.5 million and Canaccords -$0.6 million. Taylor states, “recent M&A should inflect growth curve in the future,” reiterating that these five acquisitions, which had a total consideration of roughly $16 million, will have annualized revenue of approximately $11 million.
CloudMD ended the second quarter with cash and equivalents of $13.8 million, with Taylor believing that it still has $9.5 million to fund additional acquisitions to expand its footprint in Canada and the US. They make a point to say that this is a potential catalyst even with the heavy M&A CloudMD has already done as the company is focused on acquiring accretive assets.
Canaccord also changed their full-year 2020 and 2021 revenue and adjusted EBITDA estimates with the price target increase. Canaccord now forecasts revenue to be $17.7 million and $39.3 million, while adjusted EBITDA to be -$3.5 million and 3.5 million for 2020 and 2021, respectively.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
Full Disclosure: CloudMD Software & Services is a former client of Canacom Group.